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This US Senator Wants to Legalize Weed, Should Investors Get High on Pot Stocks?

Originally published on: CCN
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February 12, 2019

For the best part of a century, American regulators have locked themselves into what many have recognised as an unwinnable war against a hardy plant that is cheap and easy to grow, with a wide variety of uses and end products.

Despite a mountain of evidence within that time to indicate that prohibition and its ancillary policies just do not work, an obsession with marijuana has fed the rise of a draconian criminal justice framework designed to get weed off the streets and criminalise the entire supply chain of what is basically a naturally occurring plant.

U.S. Sen. Ron Wyden Proposes Bill to Legalize Weed

Things, however, seem to be taking an exciting turn with the news that for the second time in 2019, a bill has been filed in Congress seeking the federal legalisation of marijuana.

What are the implications for the American justice system and the millions of lives impacted by decades of prohibition? On a different note, what does this mean for pot stocks?

‘420’ Bills Seek to Undo a Century of ‘Willie Horton’ Politics

While the damage caused by cocaine and opioids is well documented, much less understandable is the extent to which marijuana has been criminalised in the U.S. over the past 80 plus years. The U.S., which already has more than 2.2 million prisoners – by far the world’s largest prison population – puts the percentage of its prisoners locked up on drug charges at 46 percent. According to the ACLU, 52 percent of all drug arrests in 2010 were for marijuana, the vast majority of which were for possession.

The U.S. thus expends incredible amounts of effort and law enforcement budgets on tackling possession of a plant. Some legislation like former President Bill Clinton’s infamous “three strikes” law has placed people in prison for the rest of their lives because of possession of this plant. If this sounds insane, then one only needs to examine the rationale behind taking a hammer to a fly on such a meta level. Reporting on its findings, the ACLU says:

“Nationwide, the arrest data revealed one consistent trend: significant racial bias. Despite roughly equal usage rates, Blacks are 3.73 times more likely than whites to be arrested for marijuana.”

Racism, or the peculiar brand of the world’s oldest ailment which specifically afflicts the U.S. is apparently the real reason behind this insistence on fighting a real and never-ending war against an imaginary foe armed with dreadlocks and Bob Marley mixtapes.

Unfortunately, the potential held by marijuana as a medicinal ingredient, a painkiller, and a cheap, sustainable substitute for timber-based paper has been sacrificed for decades because politicians have been eager to use the prospect of punishing Terrell and Devonte as “tough on crime” red meat for their not-in-the-slightest-bit-racist voter bases.

President Ronald Reagan with Nancy Reagan during the signing ceremony for H.R. 5484 the Anti Drug Abuse Act of 1986 | Source: Reagan Library

This, however, is starting to change. Senator Ron Wyden has proposed that marijuana not only be removed from the Controlled Substance Act (CSA) but also be regulated and taxed using a permit system to control the cannabis trade.

The bill named S.420 is an attempt to reference April 20 – a worldwide marijuana “holiday” – via a legislative pun which dates as far back as 2003. Just last month, Oregon Rep. Earl Blumenauer proposed H.R. 420, which seeks to regulate marijuana in the same way as alcohol.

Speaking in a statement released to the press, Wyden said:

“S. 420 may get some laughs, but what matters most is that it will get people talking about the serious need to end failed prohibition. The federal prohibition of marijuana is wrong – plain and simple. Too many lives have been wasted and too many economic opportunities have been missed. It’s time for Congress to respect the will of the voters in Oregon and nationwide, who are demanding common-sense drug policies.”

Pot Stocks May be Heading For The Moon

As a result of the legislative pressure alone, chances are that pot stocks might see some upward movement, but this will not fully manifest until full federal legalization of marijuana takes place. The caveat is that excessive government taxation on weed might drive product prices up and force consumers back to illegal sources, which would not be to anyone’s advantage.

Some investors – like renowned stock picker Jeff Vinik – even believe that in the event of full legalisation, the entry rush will make the pot market unprofitable.

At the moment, recreational weed is legal in nine states and Washington D.C., while 26 states have legalized medical weed. For now, the marijuana industry remains at best volatile due to a lack of federal approval and standardized regulations. However, the influx of beer and tobacco companies into the cannabis market just might be the signal you need to know that major changes are afoot.

From customized vapors to cannabis-infused supplement drinks, tobacco and beer companies are increasingly staking their claim in the cannabis market, and clearly with good reason. Add the increased pressure on the U.S. government to legalize weed, and you have a perfect recipe for pot stock growth in 2019.

Speaking in a recent press release, Blumenauer summed up this optimism about the future of the cannabis trade. He said:

“The American people have elected the most pro-cannabis Congress in American history and significant pieces of legislation are being introduced. The House is doing its work and with the help of Senator Wyden’s leadership in the Senate, we will break through.”

U.S. Sen. Ron Wyden Image from Shutterstock

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